Compelling PM MicroCaps Series, Volume III: Alexandria Minerals

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When I sort my equity holdings by current market value, and scan down the list for the first entry representing a pm microcap (now that Copper Fox and Great Panther have convincingly outgrown the classification), the first ticker I come to is Alexandria Minerals (ALXDF.PK). Since I am constantly meddling to tweak my relative allocations to reflect my degree of confidence in future performance, I perceive no accidents in the sequence of this list. Alexandria is my largest wager in the microcap space for reasons that I think will become clear as this process of collective analysis unfolds below.

MicroCap Explorers are all about real estate

All of Alexandria's properties are located within Canada's Abitibi Greenstone gold belt. While I won't have time to review them here, the company's properties at Gwillim, Quevillon, and Matachewan are at least worth a quick inspection in the course of your due diligence.

Alexandria Minerals' key attractions, however, are located within a subsection of the Abitibi belt known as the Val d'Or ("Valley of Gold"). The company's three properties in Val d'Or are Joannes (optioned to Aurizon), Siscoe East (in a JV with NioGold), and the 100%-owned Cadillac Break (the primary focus of this discussion).All told, Alexandria is the third-largest landholder in this important gold-producing region.

The area's most prolific regional fault zone, which has produced some 100,000,000 ounce of gold since the early 1900’s, is called the Cadillac Break; and Alexandria Minerals has chosen the same name for its exciting land package within that zone. Alexandria's Cadillac Break is close to (and along the same volcanic fault from) Agnico-Eagle's Goldex mine, and Osisko's impressive Malartic property is situated just a bit further along the trend. Alexandria's Cadillac Break is a 35 km long property covering more than 11,000 hectares. The company has already established a 340,000-ounce measured & indicated gold resource at the Orenada deposit within the property, as well as a further 228,000 ounces inferred. Drilling recently resumed at the Sleepy deposit to expand upon the existing inferred resource of 150,000 ounces, but hands-down the company's primary exploration target within the Cadillac Break property remains Akasaba.

[Please see the map of the Cadillac Break property in the comments section below, although a newer version of this graphic is available at the company's website here. This is the kind of picture that can lead one to conclude that owning at least a tiny slice might represent a gamble with better odds that any trip to the casino is likely to yield (please read the prelude post carefully if you have not already).]

Akasaba is the site of an historic gold and silver mine that produced roughly 40,000 ounces of gold, at an average grade of 5.12 g/t Au, and 12,000 ounces of silver, down to 90 m depth in 1961-1963. With that site as their starting point, Alexandria has enjoyed tremendous success expanding the scale of the known deposit in all directions. The company has also discovered a high-grade gold zone just east of the main zone, and positive drill results have come from the area between the two zones as well. The next potential major catalyst for shares of Alexandria will likely come during or after the ongoing 20,000 drill program at Akasaba, when the company will release an initial resource estimate that quantifies the success they've enjoyed to date.As is often the case for successful explorers, continued success in drilling has led to a welcome delay in the issuance of that report.

My shift from passive holder to intrigued acquirer

The smallest microcap stocks routinely elude the market's radar, failing to gain widespread notice, and more importantly failing to adjust value appropriately over time as successive mineral discoveries, successful drill intercepts, and yes, increasing metal prices raise the implied shareholder value. It can take years of steady observation to gain signficant confidence in the degree of the market's disconnect with respect to failing to adjust market value to reflect accomplishments, and after several years of observing Alexandria in this way, I feel it is among the more flagrant examples of the market's inefficiency when it comes to assigning value to these misunderstood and overlooked entities. That is the same methodology I employed when I brought Great Panther and Copper Fox to the community's attention prior to their respective breakouts. The longer the shares remained range-bound as implied or estimated resources expanded, development progressed, and metal prices soared, the more confident I grew in the inevitability of a powerful breakout event.

Often times, I will initiate a small real-life position in a microcap stock that really grabs my attention, if only to ensure that I will invest the time necessary to develop the sort of deep familiarity with the company's prospects that is required before seeking any significant degree of exposure. Thus, I find that my more significant holdings grow organically within my portfolio as due diligence proceeds, and market opportunities present themselves. Some opportunities will undoubtedly get away from me using this approach, but I have been pleased with the results over the long-term. I can recall the precise moment when I really shifted gears from holding only a small, timid level of exposure to ALXDF.PK; to aggressively targeting a sizable relative allocation. As you might have guessed, it was a moment that served to greatly enhance my confidence in the investment thesis I was developing at the time, and as chance would have it, it was almost exactly one year ago!

On March 23, 2010, Alexandria announced that Agnico-Eagle Mines had acquired a 9.9% equity stake in the company by way of a private placement priced a few cents above the market value at the time. As Alexandria explained: "Its investment at a premium is a powerful endorsement of the potential of our projects, and we look forward to initiating our relationship with Agnico-Eagle and benefiting from its expertise".

With Agnico's Goldex mine located just a few kilometers along the defining fault line from Alexandria's impressively contiguous block of claims that make up its "Cadillac Break" property group, I did indeed interpret Agnico's interest as a significant strategic development for Alexandria. Given Agnico's track record of cultivating acquisition opportunities in this gradual way, the mid-tier's stated intention to pursue multiple small-scale acquisitions, and the extremely high regard in which I hold Agnico CEO Sean Boyd and the rest of Agnico's management team, the miner's move to acquire shares of Alexandria served as something of a green light for me to follow suit. I do not recommend that investors blindly mimic the microcap investment disclosures by larger mining companies, even from mining companies they know and respect, without being able to forge a solid investment thesis in the absence of such an investment. In the case of Alexandria, I already had my investment thesis for why I thought it had uncommon potential, and the AEM purchase merely validated the thesis.

A case study in persistent market disconnects

To illustrate the process by which I detect those meaningful market disconnects between micro-cap share prices and implied shareholder value over time as discussed above, let us consider the example of Alexandria Minerals in the timeframe since AEM purchased its stake at CDN$0.20 per share. For starters, gold was trading for $1,100 at the time, and has since appreciated 30%. The next month, Alexandria encountered visible gold at Akasabe with an ultra high-grade 17.33 g/t gold over 1.5 meters. In May, Akasaba's high grade zone continues to extend eastward with results including a shallow intercept (only 60m deep) of 36.4g/t over 0.5m. In June, the company reported an impressively thick (revised) 86.3m interval of solid 1.97g/t gold at Akasaba. Another hole that month returned 2.81m at 7.41g/t. By July, the consistent success of their efforts led to a second exploration drill being dispatched to Akasaba. Later that month, the company hit 1 meter of 23.89g/t. September brought the highest grades encountered to date, with 85.89g/t over 0.5m; that is, until October saw 121g/t over 1m. The latter was suggestive of some continuity in the mineralized structure between the Akasaba main zone where the historical mine site was, and the East high grade zone. When six drill hole assays were reported in November, four returned significant gold concentrations featuring grades as high as 11.65g/t and 60.11g/t. By December, drilling beneath the historic mine site in the main zone returned a wide 25m zone of 0.73g/t from about 260m of depth. A few days later, the deposit grew deeper still with strong gold and silver concentrations between 320m and 450m below surface. This also suggested that a 100m width of the deposit near surface remained consistent with the width of the deposit at depth. In January 2011, deep drilling at the East high grade zone found 19.74g/t over 2.4m. In February 2011, Alexandria announced a 20,000 meter drilling program at Akasaba, representing roughly a doubling of all prior exploration effort on the property by the company. Soonafter announced two major finds of 1.69g/t over 36m and 1.38g/t over 31.5m. Meanwhile, at the Sleepy project, where a 150,000 ounce inferred resource has already been established, Alexandria found 3.81g/t over 9m in a deep drill hole designed to test potential at depth. Last month, more promising shallow intercepts from Akasaba like 38.5g/t over 0.6m continue to confirm the continuity of the site's shallow potential.

I know the above paragraph may be a lot to take in, but I took the time to compile those accomplishments to prove a key point. While one does not expect every single successful drill result to spur share price appreciation in isolation, a record this impressive and consistent of remarkable exploration success within one of Canada's prime gold-producing regions certainly warranted some upward market adjustment. Throw in the 30% increase in the gold price, and the fact that Alexandria shares sit below where they were when AEM bought them begins to border on ridiculous. When you've put you time into DD on a particular company, and they never let you down with successful result after result after result in their exploration work, then a stagnant share price in a rising gold price environment can itself become a glowing neon sign indicating the presence of a significant market disconnect. All that without even considering the strategic nature of the company's contiguous land holdings in the Cadillac Break.

I look forward to hearing your initial thoughts and reactions to Alexandria Minerals, and encourage Fools to use this post as a compendium of collective due diligence on the stock. I remind Fools to exercise patience and restraint when considering or acquiring microcap om plays; not only because of their speculative nature, but also because I intend to cover more than 30 companies over the course of this series. As the series rolls on, many of you I'm sure will wish to keep some cash on the sidelines in case subsequent offerings also strike you as opportunities not to be avoided. :)

"To-date the company has identified gold resources totaling 433,000 oz. Measured and Indicated and 471,000 Inferred on two of the three projects, Orenada and Sleepy, and is working to enlarge the third, Akasaba. All have considerable growth potential at depth and along strike and we are confident in our ability to advance these properties towards production in the near term."

I think this company has some serious potential, however, one thing I really dislike is their tentative timeline for advancing their projects toward production. As an investor, I really prefer seeing specific dates, particularly with regards to revenues and mine development. I want to know what the goal is and if they are on track to achieve it. What is the "near term"? Perhaps you may have more insight on this. Regardless, though, to attract broad investor interest they should really look into changing that...

Copper Fox, by contrast has been very transparent with the advancement of the Schaft Creek Mineral Deposit, and I believe it is one major reason its share price has appreciated so strongly over the past few months...

Thanks for the detailed analysis. The map on Alexandria's web site is very intriguing. There may be even more to make this stock worth evaluating, from their website:

Alexandria Minerals owns or has rights to acquire 21 properties along the Cadillac Break stretching from Matachewan in the west to Val d’Or in the east, comprising more than 15% of this fault zone. The Company’s current focus is on its extensive land position in Val d’Or, where it currently holds rights to 557 claims, including a 23 km corridor of 529 claims along the Cadillac Break. The Company assembled this premier land position through staking and through option and acquisition agreements with Teck-Cominco (formerly Aur Resources), IAMGOLD (formerly Cambior) and various other companies.

When one takes into account the sheer number of claims I believe that Alexandria is an acquisition play as well.

It is incorrect to fault this company for not providing a timeline to production, and to compare it to Copper Fox in that way. The company is in an earlier stage of development, and timelines will be forthcoming once resources have been more fully explored and the economic parameters of a mine plan assessed. Also, they are presently assessing the economics of fast-tracked production opportunities at Orenada, and "aggressively evaluating production opportunities". I think you can expect some indication of a timeline for Orenada by the end of the summer.

What you referenced there is merely a more detailed description of the same properties discussed above, rather than separate set of assets. But you're right, the strategic nature of their 15% landholding of the Val d'Orfault zone does make the company a compelling takeover target. Quite likely, however, a potential suitor like AEM will wait until the explorer establishes a resource of sufficient scale (say, 1 million ounces M&I or so) before making a move.

Chris....wow! 30 micro-caps in this series. I thought it was only going to be 8, and even then I was super stoked. Now I am worried I won't have enough $$ for this

Thanks for providing all of the drill assessment data. Their findings over the past year, since AEM's 9.9% investment in Alexandria is impressive! I intend to visit their webiste for some more DD but the comment by MW4M brings to light a good question. Whats your take on their non-specific timeline? It seems like that maybe a factor playing into the markets valuation of the company.

Sinch. This is impressive. I can't believe you have found 30 as interesting as this. I look forward to all of them, and thank you for your generosity. Sure, increasing interest in stocks you own is always a good idea, but you are really providing an education using powerful, potentially profitable information.

Great point, but my time is finite. I will highlight different aspects of each company in the series to the extent that I am able, but constraints on my time require that community members pull a portion of the weight. I really want this to be a collective exercise in DD, so I invite members to explore the biographies of Alexandria's phenomenally experienced management team, and share their thoughts here for the benefit of all. I will say I've been as delighted with their performance as I have been with any team out there. The exploration results, and AEM's involvement, speak volumes.

Thanks, but I can't take credit for finding them all, and I won't necessarily say that all are equally compelling. :) Many on my list were provided by community members after I asked for ideas in the Prelude post, and in some of those cases I will be examining companies for the first time as I prepare my analysis, and will share my impression of how compelling a play each might be in due course.

Thanks to everyone for sending along ideas. Some of them I've purchased small initial stakes in already. :) - PCGold, for i.e.

Afer reading the presentation, I am left with some questions I am hoping Chris or other Fools can help me with.

On slide 3, they state that global gold resources are currently valued at $29/oz. Does that mean their profit per oz after all operating costs is $29/oz or does that mena that it only costs them $29 per oz, suggesting a HUGE profit from their inferred 420,000 oz of AU?

As for management, the CEO/President and Co-Founder is Eric Owens who has had 30 years experience in the biz workgin for organizations liek Newmont Mining, BHP Minerals etc. i have to delve further to see what he did there. Peter legein, Teh VP of Exploration also worked for BHP and was the discovere of Caber and Caber North near Matagami .

89% of the board members have 25+ years of mining experience while one has 40+ years of growth-stage company experience. Management owns 17% of the company, which is nice to see.

As for the Akasaba site, they plan to have a 43-101 report done by middle of the year. That's all I could muster from the presentation....its time to go to the website and see whats left to see.

There is no way for a company at Alexandria's stage of development to have any data to work with regarding profits or operating costs. Estimates of life of mine operating costs (and profit, by extension) can not be discerned until an exploration company reaches the feasibility stage with the release of its first preliminary economic assessment or full-fledged feasibility study. Alexandria has not reached this stage in its development, so you will not want to be looking for / expecting any indications whatsoever of cost or profit projections for any of its properties.

What they are referring to is the market cap of the company relative to the number of ounces identified to date. Purely raqw look at the market's valuation of identified ounces in the ground, irrespective of operating parameters or projected gold prices.

This is a crucially important point to understand very well before proceeding into these microcaps, so please let me know if that doesn't clear the matter up. :) Remember to think of these companies in terms of life stages (I think I discussed this in the Prelude).

But let me frame the topic in a different way, relating the successive stages to those of a human life:

Mine commissioning and ramp-up to commercial production = joining the workforce, hopefully for a long and profitable career.

......

Under that framework, Alexandria is but a child... albeit the sort of child that some may consider a prodigy. A child, even a prodigy, is far too busy playing in the dirt to care about such adult matters as future operating costs and profits. Caza would be something of a toddler, while Copper Fox is transitioning from early adulthood into its key formative years. Does this help?

Thanks for the hep in understanding what I am reading. So, the data on slide 3 pertaining to Global Gold Resources then means they are worth 12.18 million, using the 420,000 inferred ounces and value of $29/oz. Is this is a typical method of valuing what a micro PM is worth at the moment? Why use $29/oz when gold is valued much more than that?

Thanks for the timeline anaolgy. I am going to put that in a word document and print it out for reference, if you don't mind.

A question I have is since Alexandria is planning on conducting an economic assessment of their Orenada site and increase drilling at the Sleepy site, wouldn't that mean that Alexandria is transitioning more into adolescence/early adulthood?

Your timeline analogy makes it much easier to understand the inherent risks invovled with investing in these microcap pm'ers.

So, the data on slide 3 pertaining to Global Gold Resources then means they are worth 12.18 million, using the 420,000 inferred ounces and value of $29/oz. Is this is a typical method of valuing what a micro PM is worth at the moment? Why use $29/oz when gold is valued much more than that?

Nope, still not it. :) What they're saying is that when you take the company's market capitalization and divide it by the number of ounces identified to date, that this results in an implied valuation by the market equivalent to $29 for each of those ounces. (Remember that inferred ounces are almost always in addition to M&I ounces, unless otherwiose specified)

Because of the early stage of development, we wouldn't expect a market value in the 100s of dollars like the $280 per P&P ounce in reserves that Gammon just paid for Capital Gold (already a producer). But, if you were to place all the exploration-stage resource plays side by side and look at market cap / estimated global ounces, you would find a prevailing market value for exploration-stage players that is well above that $29 per ounce. So you see, they didn't devise a magic number, but rather calculated the $29 figure as the implied valuation granted by the market (and illustrative of the deep market disconnect I referred to in my write-up).

Alexandria gives 2 links to analyst reports, both have some interesting tidbits in them, the link to http://www.capitalideasresearch.com/documents/File/AZX-Jan-16-10.pdf(requires a free account to their website)has some more info on valuing gold explorers:"Alexandria isn’t producing gold yet but it is producing encouraging news. Drilling results are building a case for a mine yet the company’s valuation appears low: The average explorer is valued at $68 per ounce of resource. Alexandria’s shares trade at a valuation of just $33 per ounce of gold resource."

If I understand this correctly, the $29/oz that Jbay76 referenced in comment #13 appears to be a more generic way to value explorers regardless of the price of gold. This is probably redundant to what Sinch already said, just trying to word it in a way that makes sense to me and hopefully helps others.

Sinch can you confirm I am understanding this correctly?Assuming this analyst's research is accurate, it lends more credance to just how undervalued Alexandria shares could be/ already are.

The analyst citing a valuation of $33 per ounce and Alexandria citing $29 per ounce are both representations of the same calculation (because the share price is volatile, where the share price was on the day the calculation was made will have a powerful impact on the calculation, which accounts for the difference between the numbers.

Thanks for posting that, golfer. I had looked earlier for an up-to-date figure for prevailing market valuation for an exploration-stage company ... and $68 per ounce sounds about right as a likely market average. Given its string of exploration successes, I would consider a sudden doubling to approach $0.40 as a likely first-stage move to erase much of the enormous market disconnect I referred to above. I believe CPFXF's move from under $0.30 to above $0.70 last fall represented a similar sudden erasure of a longstanding, deep market disconnect.

I don't know of a clearer way to explain what the figures represent than my discussions above, but you are right, neither the $29 figure nor the $33 figure take the gold price into account, but rather only the number of ounces estimated to exist on the basis of drilling to date.

Thanks for both of your examples, they help quite a bit. I am still hung up on valuing a micro miner so I will check out the link you sent golfer121501 and hope for a little side knowledge that does not detract from the major purpose of this discussion. So, thanks Sinch for taking the time out to help me understand these issues and I'll try to not slow down the progress of future posts.

Eric Owens, President and CEO of Alexandria Minerals, said, "We are excited by the similarities we are encountering between Akasaba and other gold-rich VMS-style deposits in the region, notably the 9 million ounce La Ronde deposit as well as the Horne Mine in Noranda, a copper mine that produced some 14 million ounces of gold. These similarities are further apparent because we are seeing strongly anomalous copper, silver, zinc and molybdenum values."

Thanks for the tip. I'll add them to the list. :) Those silver grade are not so outstanding, but the thickness of the intercepts makes the grades far more appealing. Also, the lead and zinc values look quite promising. I'll try to keep an eye on them, and have a look at their other properties. If I find them interesting after a closer look, I'll include them in the series.

Just wondering if you have come across Tinka Resources in your research. They have 3 properties in Peru, one of which seems to have some pretty good grades and a 43-101 inferred resource of 20 million oz. Ag. From the website:

The Nash Creek deposit is located in New Brunswick and has an NI43 101 indicated and inferred resource of:

Zinc: 539,000,000 lbsLead: 109,000,000 lbsSilver: 5,300,000 ozs

This of course is being expanded with the current drill program. For example, the recent results I just posted were below the already outlined 9m tonne NI 43 101 compliant silver-lead-zinc deposit. Which means the 9m tonnes are probably just the beginning of this deposit.

The Nash Creek deposit is open pit amenable with all infrastructure in place including power lines, a highway, rail lines all transecting the property, and a smelter and seaport within 25 kms, and 2 mills within 40 kms.

Nash Creek is in the backyard of mining giant Xstrata's Brunswick Mine, which was scheduled to be depleted early this year. Now rumor has it that they are going to have to purchase a nearby resource in order to feed their smelter, which puts Nash Creek on the radar, especially after the recent results.

The Reserve Creek project is located in Ontario and does not have an NI43 101 yet, but has produced some very promising results lately:

They still have over $4m in the treasury for further exploration this summer.

Also worth noting, there has been a major purchase by the brokerage Dominick and Dominick (20m shares I think) in the last couple weeks on the open market. No one seems to know who this is, but we are happy he/she is here because the last financier was selling into any good news that came out. Now with Joe Dwek management made a quick buck off the financing and are done selling, shareholders are optimistic for the SP to finally appreciate.

Not much was mentioned about Alexandria's management team. What do you know about them and how do they rate in your opinion with some of the other highly respected managment teams like Endeavor?

From Alexandria’s website:

Eric Owens– President and CEO, Director Dr. Owens co-founded Alexandria Minerals and helped guide the company to its present status as a reporting issuer. He has 23 years of experience in the mineral exploration industry in North America, Mexico and Central America, and previously held positions with Newmont Mining, BHP Minerals, Phelps Dodge, and Echo Bay. His accomplishments include the initial discovery holes at Intrepid Minerals’ El Zapote silver deposit in El Salvador, definition drilling of the American Girl and Madre-Padre gold mines in California, and at the Brookbank gold project in northern Ontario, as well as numerous early-stage base and precious metals discoveries in North and Central America. Dr. Owens holds a Ph.D. (1992) in Geology from the University of Western Ontario and is a licensed Professional Geologist.

Peter Legein – Vice President of Exploration Peter Legein is a professional geologist and management consultant with over 30 years of progressive experience in base metal and gold exploration in Canada and Australia including 20 years with Utah Mines Ltd and BHP. Proven discoverer of two significant base metal deposits, Caber and Caber North, located near Matagami Quebec, for which BHP was awarded the Quebec Prospector of the Year award in 1994. Mr. Legein also discovered numerous base metal and gold showings in the Abitibi region of Quebec and Ontario as well as in Newfoundland. Peter Legein is graduate of Concordia University, B.Sc. Geology, and the Executive Management MBA program at Royal Roads University, Victoria BC.

John Francis - CFO Mr. Francis is a Chartered Accountant, graduate of University of Toronto, and acts as CFO for Queenston Mining Inc., as well as a Vice President and CFO for Jaguar Nickel Inc. He has previously served as VP and CFO for a number of other companies, including Vencan Gold Corporation and Consolidated Durham Mines, and has worked with Chartered Accounting Firms, Coopers and Lybrand (now PriceWaterhouseCooper LLP) and Touche Ross.

Charles Page - Director and Chair of the Audit CommitteeMr. Page, PGeo, is the President and CEO of Queenston Mining Inc., a position he has held since 1996. He graduated in 1983 from the University of Waterloo with a master’s degree in geology and a discipline in gold. He has over 30 years of mineral exploration experience both domestic and abroad and has guided Queenston’s exploration success in the Abitibi district where it continues to be one of the most active juniors in the region.

Declan Costelloe – Director Mr. Costelloe has more than 20 years of experience in the international exploration, mining and investment industries. He holds a B.Sc. in Mining Geology (1990) from Cardiff University and is a Chartered Engineer with the Institute of Materials, Minerals and Mining. Mr. Costelloe previously held positions with SRK Consulting, Monarch Resources, and Golden Star Resources, and was Investment Manager and Research Director for Veneroso Associates until March, 2006. He is President of Celtic Mining, and is currently in the process of setting up and growing mineral funds.

Ed Stuart – Director Mr. Stuart has been actively involved in the mining and exploration business for the last 28 years. Of these, 24 years were with Aur Resources Inc, which he joined in 1984 to start the then junior company’s exploration activities in Val-d’Or, Quebec. At the time of Aur’s $4.1 billion acquisition by Teck Cominco in September, 2007, Mr. Stuart held the position of Executive Vice-President, Mining Operations, responsible for Aur’s world-wide mining operations.

Prior to this, he held various other senior posts with Aur including President, North America Division, with overall responsibility for North-American exploration and mining and Vice-President Development Projects where he was responsible principally for construction of the Duck Pond Mine in Newfoundland. Prior to joining Aur, Mr. Stuart held positions with the consulting firm of Derry, Michener & Booth in Toronto and with Patino Mines Inc. in Chibougamau, Quebec. Mr. Stuart is currently President of Brannach Services Inc., a private firm providing consulting services to the minerals industry and he serves on the Board of Directors of Orbit Garant Drilling. Mr. Stuart holds a B.Sc. degree from University College Dublin, Ireland and a M.Sc. degree from Michigan Technological University. He is a member of the Association of Professional Geoscientists of Ontario, a national member of the Canadian Institute of Mining and Metallurgy and a member of the Prospectors and Developers Association of Canada.

John Thomas – Director and Chair of the Compensation Committee Dr. Thomas holds a Ph.D. (1973) in Chemical Engineering from the University of Manchester Institute of Science and Technology. With more than 30 years experience in the mining industry, Dr. Thomas has advanced many projects to production, and has also managed mine projects in North and South America, Africa and Russia. He has held senior positions with Inco, Hecla Mining, Star Mining, and Trans-Siberian Gold, and most recently was Technical Director for the $10-million feasibility study at the Sukhoi Log gold project in Siberia. Dr. Thomas is currently Vice-President of Operations for Bolivar Gold Corporation, and prior to that was the company’s General Manager for Development and Operations at its Tomi gold mine in Venezuela.

John Yarnell – Director and Chairman of the Board Mr. Yarnell is President of Yarnell Companies Inc., an investment and management services firm. Mr. Yarnell is the founder and retired Chairman of the Quorum Group of Companies and former Chairman of Poco Petroleums, Guard Incorporated, and Aluma Systems. He is a present and past director of many private and public companies, and has extensive experience with emerging growth companies. He holds a B.Comm (1949) from the University of Manitoba, and a M.B.A (1952) from Harvard Business School.

Tinka is quite a popular choice among Fools who sent me suggestions. I have placed the company in slot #7 for this series. :)

skypilot,

Thank you so much for embracing the spirit of this collective exercise with so much energy! In your comment #31, you have illustrated the value of collective due diligence as powerfully as I can imagine. Even though I considered myself fully informed on Alexandria Minerals prior to this post, you have reminded me that we are likely never fully informed unless we have a seat on the board. :) Perhaps its a consequence of having too much on my plate and it's possible I missed something in a press release along the way, but I had no idea that Alexandria was involved in a potential jv as an operator.

If it's no trouble, please do post the text of that pdf from Carmax Mining, and let's all learn together what further added value we can perceiove in that potential jv.

Thanks again!! I am so excited by the strength of what we're doing here as a group, and I thank you all for taking part!

In other news, I just had an open can of cashews right next to my coffee mug, and let's just say that under those circumstances, it's best not to keep staring at a screen while reaching for cashews. :)

The Whiskeyjack property lies in the Southwest part of the Abitibi Greenstone belt along the Kirkland-Larder Lake break near Matachewan.

The Kirkland - Larder Lake break has produced 34 million ounces of gold. The Whiskeyjack is adjacent to Northgate Minerals Corp.'s Young- Davidson which has a proven & probable resource of 2,758,000 ounces of gold .

Carmax is presently developing a joint venture agreement with Alexandria Minerals Corp. who has completed its 50% earn in.

Adjacent to Young-Davidson; that's huge! Next would be to look at maps of both properties, and see whether there may be any indication of a possible structural relationship between the Young-Davidson and Whiskeyjack mineralized structure ... a la Paramount Gold.

If I can review those maps, and can extend expectations for Whiskeyjack and/or Matachewan based upon the proximity / trend continuity with Young Davidson, then I may just have to increase my Alexandria stake further after waiting through my required quiet period.

Because this discussion has really evolved into a great experiment in collective due diligence, I have extended an invitation to Alexandria Minerals to join us here directly in our discussion as I know we all enjoyed in the Caza Gols post. I think we'd all be interested to learn more about this Whiskeyjack property, and this might be your chance to consider whether you have any other questions about the company. If they do end up joining us here, I will create a new blog post directing the community back to this link. If you would like to see someone from Alexandria come in here, please speak up. :)

Thanks for waiting, Fools. In the meantime I can report I enjoyed a terrific conversation earlier today with Alexandria Minerals' Director of Business Development Mary Vorvis, and it is she that will be joining us here.

JBay, you may want to seek further clarification from her regarding the context of that current share valuation at $28/$29 per ounce of total resources, and how that compares to the industry average for junior explorers. We're clearly nowhere even in the neighborhood of having these shares reflect the value of estimated resources from Orenada and Sleepy alone.

Also, has anyone noticed that they're sitting on 200,000 shares of Aurizon Mines (today trading at $7.11 = $1.42m) resulting from the option agreement with Aurizon for the Joannes claims? Sweet!

I am hoping to get a little more background on the NioGold joint venture as well. My understanding is that essentially every asset outside the Cadillac Break is presently on the back burner while the company hones its effort on those core properties, but I nonetheless consider it instructional in the course of due diligence to consider the broader long-term potential of additional properties in the portfolio.

I could construct a very strong investment case for this company even if I looked at nothing more than the drill results from Akasaba. Separately, at the present market cap, I could construct a strong investment case for the shares even if all they had were those identified resources at Orenada and Sleepy. Everything else -- Matachewan, the Whiskeyjack jv, Siskoe East, Quevillon, Guillim, and all the underexplored property within the Cadillac Break block -- is all triple gravy, in my opinion.

The deeper I look, the better this stock continues to look. I don't know precisely when the market will move to erase the huge value disconnect that presently exists, but I am delighted that I'll already be in position when it does.

The Whiskeyjack Creek property is located in Cairo Township in the Larder Lake Mining Division of Ontario. Situated approximately 5 km east of the town of Matachewan the claims are easily accessed via provincial Highways 66 and 65.

The property covers a wide band of an east to northeast trending assemblage of mafic to ultra-mafif volcanic rocks with felsic and interflow sedimentary units which have been intruded by conformable mafic to ultra-mafic body to the west and numerous syenitic to quartz diorite units to the east. The central portion of the property is transected by a major deformation zone that is interpreted as a splay from the Larder Lake - Cadillac Break that hosts or is associated with significant gold deposits between Val D'Or and Matachewan.

The company entered into an agreement with Alexandria Minerals whereby after expending $350,000 on exploration and 50,000 shares Alexandria would earn a 50 % interest in the property. Carmax and Alexandria are currently negotiating a joint venture agreement.

Carmax Mining Corp. (CXM-TSX.V) is a publicly traded Canadian exploration company which is focused on exploring and developing gold, silver and copper properties with the potential to host world class economic deposits. Carmax is currently exploring three Projects the Eaglehead in the prolific Quesnel trough in Northwestern B.C., the Whiskeyjack on the Kirkland Larder Lake break in Northern Ontario and the Gold Tip in the Cassiar terrane in Northern B.C.

The Eaglehead property is located in the Liard Mining division approximately 50 KM east of Dease Lake in Northwestern B.C. and is being explored for a porphyry copper, molybdenum, gold and silver deposit. The Eaglehead is adjacent to Hard Creek Nickel's Turnagain project, which hosts measured and indicated resources of 695,012,000 tonnes grading 0.216% total Nickel and 0.014 %Cobalt, and it is also 50 Km north of Capstone Mining's Kutcho deposit. At the Eaglehead five zones of mineralization have been discovered to date covering a strike length of 8 KM. Total lengths of 22,000m in 95 diamond drill holes have been completed with 36 being drilled by Carmax and 59 being historical.

The Gold Tip property is located in close proximity to the Silvertip Silver-Lead-Zinc property in Northern B.C. that was recently purchased by Silvercorp Metals Inc. from silver Standard Resources Inc. for $15-million in cash and shares. The advanced stage Silvertip property is just 25 kilometers from the Alaska Highway and has a history of exploration commencing in 1955 when it was explored by Conwest Exploration and others by means of adits with a total length of 2400 meters and by 71,472 meters of both surface and underground drilling in 491 holes. Imperial Metals held the Silvertip property from 1996 until 2002, when it was acquired by Silver Standard.

The Whiskeyjack property lies in the Southwest part of the Abitibi Greenstone belt along the Kirkland-Larder Lake break near Matachewan. The Kirkland - Larder Lake break has produced 34 million ounces of gold. The Whiskeyjack is adjacent to Northgate Minerals Corp.'s Young- Davidson which has a proven & probable resource of 2,758,000 ounces of gold .Carmax is presently developing a joint venture agreement with Alexandria Minerals Corp. who has completed its 50% earn in.

Alexandria's Matachewan property is located in the Matachewan Gold Camp 3 km east and in similar geology as the past-producing Young Davidson and Matachewan Consolidated gold mines where Northgate Minerals Corporation are carrying out advanced underground exploration. The Matachewan camp has produced approximately 1 million ounces of gold during the 1900's and lies along the same regional structure that hosts the 37 million ounce Kirkland Lake Gold Camp some 50 km to the east.

As a result of the current acquisition Alexandria's interest in the area increases to 35 claims covering approximately 10 km of the Cadillac-Larder Lake Break. Previous exploration on the Whiskeyjack Creek Property, includes trenching that reports up to 5.9 g/t Au over 2 meters and 2.5 g/t Au over 2 meters in iron formation and silicified basalt (John Poloni, Carmax Explorations Ltd., Internal Report, 2003) and 1.72 g/t Au over 1.5m in a diamond drill hole.

The property is underlain by similar geology and geophysics that was drilled further to the west by Alexandria in the Fall of 2005. This drilling tested a combined magnetic and induced polarization anomaly, and identified strongly sheared volcanic rocks containing quartz veining combined with carbonate-fuchsite-pyrite alteration. The drilling encountered anomalous gold values and a follow-up geochemical study suggests an environment consistent with that of volcanogenic massive sulfides.

Under terms of the agreement, which is subject to TSX approval, Alexandria has the right to earn a 50% interest in the 9 claims by: 1) paying Carmax $10,000 upon signing, 2) completion of annual work expenditures of $100,000 for an aggregate of $300,000 by December 31, 2009, 3) paying $15,000 to Carmax to satisfy prior commitments and 4) issuing 50,000 common shares of Alexandria to Carmax. The claims are subject to a 3% Net Smelter Return royalty, of which 2% can be purchased by Alexandria for $500,000 per each 1/2%.

This acquisition complements Alexandria's strategy of acquiring properties along proven regional gold structures. The Cadillac-Larder Lake Break extends for 250 km through the southwestern Abitibi district where the Company has assembled key land packages at each end of the Break in the Matachewan, Ontario and Val d'Or, Quebec mining camps.

In Val d'Or the Company has embarked on a 15,000 meter drilling program with 8 holes completed to date on the Oramaque and Orenada properties where assay results are pending. As part of the target generation process Alexandria is also compiling 70 years of historic exploration data in the area. Current drilling information including maps and sections can be viewed with the link http://www.azx.ca/currentdrilling.asp or by visiting the Company's website at www.azx.ca.

In other matters, the Company has also granted an aggregate of 300,000 incentive stock options to consultants of the corporation, of which 225,000 are exercisable at C$0.25; and 75,000 are exercisable at a price of C$0.35; for a period of 1 year.

All results presented in this press release are historical and exploratory in nature and have been reviewed by the Company's Qualified Person, Eddy Canova, P.Geo. The properties presented herein are not compliant with the standards outlined by National Instrument 43-101 Standards for Disclosure for Mineral Projects; none of these properties contain current mineral resources as defined by NI 43-101, nor does the Company intend to communicate such. Additional drilling will be required to bring the properties into compliance.

I just spoke with Mary at Alexandria Minerals, and she asked whether we could set something up for tomorrow morning instead. As a reward for your patience, she will arrange to have CEO Eric Owens join us as well at the same time. :)

I think the easiest thing to do will be for me to create a new blog post tomorrow morning that's dedicated to our conversation with Eric and Mary. I intend to post at 9:30, in advance of them logging on at 10:00am EST.They will have to leave for an 11am meeting, but in the better part of an hour I think we'll enjoy a great opportunity to interact with them.

Thank you all for your patience with me as I arrange these direct interactions, and for adjusting your morning tomorrow so that you can participate in our discussion beginning at 10am EST.

Oh, and I have a message to pass on from Eric Owens ... Yes, Whiskeyjack is absolutely an extension of the same geological structure that hosts the adjacent Young-Davidson property (Northgate Minerals' looming flagship operation). Now that's some gravy. :)

Thank you so much for embracing the spirit of this collective exercise with so much energy! In your comment #31, you have illustrated the value of collective due diligence as powerfully as I can imagine. Even though I considered myself fully informed on Alexandria Minerals prior to this post, you have reminded me that we are likely never fully informed unless we have a seat on the board. :) Perhaps its a consequence of having too much on my plate and it's possible I missed something in a press release along the way, but I had no idea that Alexandria was involved in a potential jv as an operator.

If it's no trouble, please do post the text of that pdf from Carmax Mining, and let's all learn together what further added value we can perceiove in that potential jv.

Thanks again!! I am so excited by the strength of what we're doing here as a group, and I thank you all for taking part!

In other news, I just had an open can of cashews right next to my coffee mug, and let's just say that under those circumstances, it's best not to keep staring at a screen while reaching for cashews. :)

The Eaglehead project was first explored in 1963 with drainage sampling staged from Eaglehead Lake. Copper mineralization was found in intrusive outcrop in the creek in what is now know as the Camp zone.

Carmax took over the property in 2002 after Homestake Mining let the claims lapse and has expanded the claims to 11,410 hectares. The company has drilled an additional 35 holes expanding the high grade East Zone 500 meters east.

Access and Physiography

The property is located approximately 50 km east of Dease Lake, 90 km by road, and occupies a northwesterly trending drift filled valley and ridges. The valley floor, approximately 1500 meters in elevation, is extensively drift cover in which eskers and kettles are prominent features. Road access from the camp to the Caribou Pass road and Boulder Creek was completed in 2006.

Geology

The Eaglehead property lies on the southern flank at the east end of a zoned, Early to Late Jurassic batholith that centers on Eaglehead Lake. The batholith is bounded on the northeast by the Kutcho fault, a major northwest trending structure, characterized by strongly cataclastized, foliated and mylonitized rocks over widths of 1.5 to 3.0 km. The southwest flank of the batholith is bounded by elements of the King Salmon Assemblage comprising of Cache Creek rocks overlain by upper Triassic Kutcho volcanoclastics, Sinwa limestone and sediments of the Inklin Formation.

The Thiber fault marks the contact between the Cache Creek and Inklin rocks south of Eaglehead. Movement on the fault is right lateral with the southwest side being structurally higher. One splay off this fault cuts through the property along the southern contact of the Eaglehead batholith. It appears to truncate volcanic and sedimentary stratigraphy and provides the main structural fabric within the mineralized areas in the valley bottom.

Exploration

The Eaglehead has 5 distinct mineralized zones along a strike length of over 5 km. Work to date suggests the mineralization is associated with strong hydrothermal alteration and quartz veins.

The Camp zone has been tested with 18 holes of which 17 intersected significant mineralization with an average width of 15.4 m at 0.60 % cu and 0.10 % mo. Historical inferred resource estimate of 2.72 m tonnes of 0.45 % Cu was calculated by Homestake.

The Pass Zone has been tested by 21 holes and lies 1.5 km southeast of the Camp Zone with a historical inferred resource estimate of 11.5 m tones of 0.52 % Cu calculated by Homestake.

The Bornite Zone has been tested with 22 holes all of which intersected significant copper mineralization. The moderate to steeply dipping mineralized zone is

The East Zone has had the most drilling with 28 holes totally over 10,000 m. The East Zone lies 400 m east of and is essentially the continuation of the Bornite Zone. The mineralized zone is approximately 500 m on strike and is open in all directions. Recent inferred resource by Giroux indicates 53 m tones at 0.338 % Cu, 0.013 % Mo, 0.078 g/t Au and 0.876 g/t Ag using a 0.20 % Cu cutoff.

Historical data, although collected using acceptable industry methods, have not been confirmed and are not 43-101 compliant. There is insufficient drilling in the Camp, Pass and Bornite Zones to calculate a resource estimate.

Carmax Mining Management :

Jevin WerbesPresident, CEO and Director

Mr. Werbes brings more than 17years experience in the mining industry in British Columbia and Nevada. More recently in his career, he has been successful in acquiring strategic mineral properties as a property vendor and actively involved in corporate development, finance and investor relations with success in assisting juniors with financings. He also currently acts as president and a director of Ansell Capital Corp.

Chris Healey, P.GeoDirector

Chris is a licensed professional geologist in Wyoming with over 38 years experience in the natural resources industry, specializing in uranium exploration and extraction. He has held senior positions with Cameco Corporation, the world's largest uranium producer, where he recently managed its US operations and was responsible for the acquisition of several major uranium properties that hosted in excess of 50 million pounds of resources. He was involved in the discovery of the world's two largest high grade deposits: Cigar Lake and McArthur River. Chris has broad and deep experience in all aspects of resource mining, especially in the uranium sector. He has also worked on uranium projects around the world, including Canada, the United States, Paraguay, Kazakhstan, Mongolia, Australia and Malawi.

Chris has a Bachelor of Science degree in Geology from the University of Wales, Swansea. He also served as the national president of the Geological Society of Canadian Institute of Mining, Metallurgy and Petroleum. In addition to belonging to several key industry associations, he has also published several scientific papers on resource and reserve evaluations.

Hrayr Agnerian, M.Sc. (Applied), P.Geo.

Hrayr Agnerian is President of Agnerian Consulting Ltd., an Independent Consulting firm offering geological consulting services to the mining industry. Since 1987, he has been practicing as a Consulting Geologist, and is an Associate of Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA). Previously, he was with the Saskatchewan Mining Development Corporation (SMDC), now CAMECO Corp., and has been a member of the boards of junior mining companies.

Mr. Agnerian has more than 40 years' experience in the mineral industry, with expertise in exploring for precious metals (including platinum group elements), base metals, industrial minerals, rare earth elements, and uranium. As a Consulting Geologist, Mr. Agnerian has worked in a variety of geological environments across Canada as well as in Argentina, Armenia, Bolivia, Brazil, Chile, China, Colombia, Cuba, Guyana, Kazakhstan, Kenya, Kyrgyzstan, Lebanon, Madagascar, Mexico, Mongolia, Nicaragua, Panama, Paraguay, Peru, Portugal, Russia, South Africa, Spain, Suriname, Tajikistan, Tanzania, Tunisia, Turkey, the USA, and Venezuela. He is fluent in English, Armenian, French, and Spanish, and has a working knowledge in Arabic, Dutch, Italian, Portuguese, Russian, and Turkish.

Mr. Agnerian has a B.Sc. degree in Geology from the American University of Beirut, Lebanon, a Diploma in Mining Exploration, ITC, Delft, The Netherlands, and an M.Sc. (Applied) degree in Geological Sciences, McGill University, Montréal. He has published on estimation of Mineral Resources, on lithologic guide to unconformity related uranium mineralization, and on valuation of exploration properties. Mr. Agnerian is a member of professional associations in Ontario, Québec, and Saskatchewan.

Bev FunstonCorporate Secretary

Bev has over 20 years office administration experience, 10 years in regulatory compliance. Bev oversees the general administration of the company and serves as Corporate Secretary for Uranium Power Corp. She also serves on the board of a number of resource companies.

Matthew G Wright, C.A.CFO

Matthew G Wright CA. has been a Chartered Accountant for over 20 years. He originally qualified in England 1990. In 1995 he relocated to Vancouver Canada and successfully acquired his Canadian C A. designation in 1997. Mr. Wright worked in public practice in both the UK and Canada until 2005 at which time he established his own accounting firm where he now provides accounting and consultancy services to over 100 personal tax clients and numerous companies both publically listed and private.

Mr. Wright commenced assisting various TSX venture issuers with the preparation of their quarterly and annual filings in 2005, and in November 2010 was appointed CFO of Galaxy Capital Corp, Carmax Mining Corp and Ansell Capital Corp.

Jeff PoloniDirector

Mr. Poloni has been involved in mineral exploration for 30 years, working on and directing projects in both North and South America. He is President of Avant Garde Signs and Pacific Watercutting

The phrase “Collateral Damage” had a negative meaning at one of my former employers. If Carmax looks good after some D. D., maybe we coin a new phrase, “Collateral Reward” as a result of collective D. D.

Just a thought…..

I have a question for you to answer when you get a chance. I had a problem finding CURRENT insider stock holdings, see #34, above. Do you have a reliable source with current information for all companies? I find that information to be helpful in “putting the puzzle together”.

Who here is familiar with interpreting magnetic and induced polarization analysis of geologic formations? I was looking at the results from this type of analysis here pertaining to Matachewan site results and it looked physchedelic at best.

Here's Alexadria's deal with Aurizon back in '08. I guess what we see now is the completion of that arrangement.

0n October 29th, 2008 Alexandria signed an option agreement agreement with Aurizon Mines Ltd. to earn 100% ownership of 19 claims on the southern most part of the Joannes Property. Under the terms of the agreement Aurizon will 1) pay Alexandria $200,000 cash and issue Aurizon common shares with a market value of $200,000 within 30 days of the effective date of the formal agreement, 2) complete $650,000 in exploration expenditures on the property over two years, and 3) issue additional common shares with a market value of $1.6 million to Alexandria before the second anniversary of the formal agreement date.

Carmax Explorations Ltd. has agreed to acquire a 100-per-cent interest in and to 59 mineral tenures encompassing approximately 27783.63 hectares of mineral exploration lands located in the Atlin mining division of northwestern British Columbia.

The newly acquired claims are located in close proximity to the Silvertip silver-lead-zinc property that was recently purchased by Silvercorp Metals Inc. from Silver Standard Resources Inc. for $15-million in cash and shares.

The advanced stage Silvertip property is located 25 kilometres from the Alaska Highway and has a history of exploration commencing in 1955 when it was explored by Conwest Exploration and others by means of underground adits with total length of 2,400 metres and by 71,472 metres of surface and underground drilling in 491 holes. Imperial Metals held the Silvertip property from 1996 to 2002 when it was acquired by Silver Standard. A 2002 technical report was updated in 2010 to National Instrument 43-101-compliant standards.

A summary of the technical report as extracted from the Silvercorp website provides current resource estimates on the Silvertip property as:

The recent revival of exploration interest in the Silvertip area has attracted several junior companies and at least one senior company, Agnico Eagle Mines Ltd., to the area. Silvercorp has stated that the company will pursue a regional exploration program concurrent with applying for a small mine permit that will enable it to generate cash flow by mining high-grade zones.

British Columbia government geologists (Bulletin B083, 1993) have determined that the Silvertip-area mineral zones are manto-type carbonate replacement deposits similar to those found at many important silver mines in Mexico and western United States. In addition to the Silvertip/Midway deposits, at least four other prospects have been identified in the district.

Carmax's newly acquired tenures are located in geologically similar areas that will be explored by technical surveys and, if warranted, by drilling.